Published August 2006
condos popping up
Office condos are offering Snohomish County businesses new options for buying their own space.
So far, there aren’t enough of these developments to call this a new, full-fledged trend in commercial properties. But the conditions are right, and now two longtime builders with a savvy understanding of the real estate market are testing the waters.
In Arlington, it’s Ramo Realty and Construction. In Lynnwood, it’s Opus Northwest.
“Actually, I built an office condo project back in 1980, but we’re hoping this is a time when people will be interested again,” said Ramo co-owner Ralph Monty. “Most of the time, in today’s market, it will cost businesses more to buy land, go through red tape for permitting and build their own building. The permits alone can take a year or two, depending on the jurisdiction. That’s too long for a lot of small businesses.”
By fall, he will have finished building the $20 million Pilchuck Plaza, a 60,000-square-foot retail and office center with five buildings of various sizes just a block east of Smokey Point Boulevard at the Smokey Point interchange of I-5.
“We knew that being off the main highway, we’d want to have something different to attract people, so we put in a three-story clock tower, which also serves to handle the elevators, and a lot of water and landscaping to make a pleasant central area for people, with parking only on the perimeters,” Monty said.
The waterscape is on a grand scale, pumping water at 600 to 800 gallons per minute to keep the waterfalls flowing. The water then fills a stream that runs through the plaza site and ends up in a 200,000-gallon pool beneath the sidewalks, where it’s recycled and pumped back through the waterfalls. Runoff water from the roofs also goes into the undergrowth pond, but water from the surrounding parking area flows into the city’s regular storm-drain system.
So far, Monty has been right in his planning and marketing. The development won’t be finished for several weeks, but two of the five buildings already have been sold, one to Dr. Bart Robison, a dentist who already has opened his office there, and the second one to Everett attorney Dennis Jordan, who plans to lease his office condo as an investment.
Priced at $250 per square foot as office condos, the spaces also can be leased, but Monty expects much of the space will be sold.
“Since the largest building is 28,000 square feet in three stories, another is 18,000 square feet in two stories and a third is a single-story 9,000-square-foot building, we’re thinking about selling them as 2,000- to 4,000-square-foot condos instead of the entire building,” he said.
Monty said the site is in a business community that includes a nearby hotel and conference center, Hawthorn Inn & Suites; restaurants; banks; and a post office just across the street.
“It’s a campus setting in an urban development,” he said. “The greenery and water-scaping will be a major attraction and make it different than anything else in the area. It will be a complex that will be particularly attractive to professional service offices, such as dentists, doctors and attorneys.”
An office in one of the new buildings will soon house the newly combined Arlington-Smokey Point Chamber of Commerce and an area visitors’ information center for tourists.
In Lynnwood, Opus Northwest is proposing a 40,100-square-foot, two-story, Class A office-condo building as the next step in the building of its 92-acre, master-planned Northpointe business park at I-5 and 164th Street SW, on the northern boundary of the city.
Priced at $250 per square foot, office sizes range from 4,400 square feet, with finished premises, HVAC and a coffee bar. Ownership includes use of all common areas in the building and four covered parking stalls per office.
The Northpointe project already has major tenants, including Cypress Semiconductor and the new Berlex biopharmaceutical plant. The new office condo building will be joined later by several other office structures at the business complex.
The office condo option has found wide appeal elsewhere in the country, according to local Realtors, but there has been only a trace of interest in the Northwest until recently when scarce land, rising prices and climbing construction costs have put ownership beyond the reach of many businesses.
“A lot of the businesses we’re hearing from are looking for smaller spaces, and they prefer to own their property rather than leasing. So we thought we could kick off this building (concept) to help them and us,” said Mark Rowe, senior real estate manager for Opus Northwest in Bellevue.
Only in the market for four months, the office condo building has found particular interest from professional service businesses, including attorneys, physicians and dentists, said Cushman & Wakefield’s Tom Bohman, the leasing agent for the Opus Northpointe development.
“The concept of office condos is already popular in California, Arizona and other markets but relatively new in the Northwest,” Bohman said. “They’re not for everybody, but they work for some businesses as the market shifts. Mortgages and payments are fixed, compared to fluctuating leasing rates that continue to escalate, so you can control your costs better.”
Bohman said tax advantages can be helpful for businesses that own their office space, including mortgage interest and depreciation, but in the marketplace, the offices are likely to increase in value, too, providing future sale opportunities.
“For professionals who typically have stable business operations and fixed space needs, office condos can be a real winner for them,” Bohman said.
For more information, contact Ramo Realty and Construction, 360-659-8551, and Tom Bohman or Gary Bullington at Cushman & Wakefield, 425-455-4500.
© 2006 The Daily Herald Co., Everett, WA